3.0 Product classification.pdf

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SAP BusinessObjects Global Trade Services 8.0

Master Data & Classification

Classification of Product Master Data

This presentation explains why to classify product master data, and how to use

classification features in SAP BusinessObjects Global Trade Services 8.0 to facilitate

the process.



© SAP 2009 / Page 2

Master Data and Classification: Classification

of Product Master Data

Unit: Master Data and Classification

Lesson 1: Master Data Delta

Lesson 2: Classification of Product Master Data



© SAP 2009 / Page 3

Lesson Objectives

After completing this presentation, you will be able to: Describe the purpose and advantages of product classification

Describe classification schemes and how they relate to each other

Define the Harmonized System of tariff nomenclature

Identify the determining factors in selecting a classification scheme

Describe how to use reference numbering schemes

Define Automatic Classification and Mass Classification

Classify products using Automatic Classification and using a worklist

The presentation is intended to give you an introduction to classification and

classification schemes, and to show how to set up some of the classification features in

the application.



© SAP 2009 / Page 4

1. Reason for Product Master Data Classification

2. Different classification schemes and their usage

3. Automatic Classification

4. Mass Classification (classification of products via worklist)

Topics

This topics focuses on what classification is, and the benefits of implementing product

master data classification.



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Introduction

What does the term Classification mean?

Classification is a process used for assigning a code to your product for identificationpurposes

A classification code is a structured number of a specific length prescribed by International or

National law and Agreements

Classification is used for different purposes:

Customs tariffs

Collection of international trade statistics

Rules of origin

Collection of internal taxes Trade negotiations

Transport tariffs and statistics

Monitoring of controlled goods

Why is it so important to classify products?

If you intend to move goods to a foreign country or Customs union, such as EU or

NAFTA, it is essential that the goods are classified in order to:

Identify what duties and controls apply

Ensure a correct Customs declaration



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Advantages of Product Classification

What are the advantages of correct product classification?

Avoid paying interest on back-payments for incorrect classification Avoid seizure of your goods or delays in their movement

Pay the correct amount of duty and VAT

Know if duty is suspended on any of your goods

Know if any preferential duty rates can be applied

Know whether you need to obtain an import or export license

Know whether excise or anti-dumping duties apply

There are many advantages to correctly classifying products, some of which are shown

here. In general, the right classifications prevent:

Delays in clearing goods

Overpayment of duty

Possible penalties



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Knowledge Check

What are the major issues

that classifying your products can prevent?



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Knowledge Check

The correct classification of your products can prevent

delays in clearing goods,

overpayment of duty, and

possible penalties for misclassification.



© SAP 2009 / Page 9





Topics

This topic describes what classification schemes are, how they are related to each

other, and how to select a classification scheme.



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Defining Classification Schemes

What are classification schemes?

The specific format of classification code used is referred to as a classification or numberingscheme

Classification schemes are used to standardize the classification process

They are the specific categories of codes, with the associated meanings for each component

of the code, defined by organizations to classify products for international trading

Classification schemes define the format of the classification code, based on the

Customs requirements of specific countries and unions.



© SAP 2009 / Page 11

Business Example

Laser optical drive unit assembly (so called mecha units) for the recording and/or

reproduction of digital video and/or audio signals; comprising at least a laser optical

reading and/or writing unit, one or more DC motors, and not containing a printed

circuit board or containing a printed circuit board not capable of signal processing for

sounds and images; for use in the manufacture of products falling within headings No

8519, 8520, 8521, 8526, 8527, 8528 or 8543

Suppose you are the producer of electronic accessories within

EU. One of the products you assemble is a CD Drive. Because

you export this product out of EU, it has to have a correct

TARIC code assigned (TARIC is an Import Classification

scheme for EU).

Every Classification code has own description which is the key for its correct

assignment to your product:

TARIC Code: 8522908080

In this example, you export this product out of the European Union, so it must have a

correct TARIC code assigned to it. TARIC is an Import Classification Scheme for the

EU.



© SAP 2009 / Page 12

Defining the Harmonized System

What is the Harmonized System (HS) of tariff nomenclature?

HS is an internationally standardized system of names and numbers for classifying tradedproducts

It is developed and maintained by the World Customs Organization (WCO), an independent

intergovernmental organization with over 170 member countries.

It is a six-digit nomenclature:

The first two digits are defined as a chapter.

The first four digits (including chapter part) are referred to as the heading.

The first six digits are known as a subheading (including header part).

8

SubheadingHeading

Chapter

5 2 2 9 0

Countries that have adopted the Harmonized System are not permitted to alter it in any

way. However, individual countries may extend a Harmonized System number to eight

or ten digits for customs and export purposes. More than 200 countries, customs and

economic unions, representing more than 98% of world trade, use the HS as a basis for

their own Classification schemes.



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Relations and Inheritance of Classification

Schemes

Classification schemes are often based on each other. In this example, the schemes

with that are of equal length or longer include the code of schemes that are shorter.

Harmonized System (6)*

Combined nomenclature (8) USITC (10) Schedule B (8)

EU TARIC (10) DE EZT (11)

* The number in the brackets shows the number of digit of the Classification scheme

Classification schemes tend to build on each other, using a reference scheme and then

extending it to add information required for specific trading requirements.



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Specific Codes

What is a tariff code?

A tariff code is a product-specific code asdocumented in the HS

They exist for almost every product involved

in global commerce

They are required on official shipping

documents for tax assessment purposes

A complete tariff code is no less than six

digits and usually no more than twelve digits

An example is the EU TARIC scheme used

by European Union.

What is a commodity code?

A commodity code identifies a commodity bya certain number to determine its commodity

rate for transport.

They are used mostly for statistical

purposes.

These codes are usually shorter than tariff

codes and can meet in very first 6 digits ( if

HS is used )

Examples are US Scheduled B and EUSTA

in European Union

845634920845634920000

A tariff code is a product-specific code as documented in the Harmonized System (HS)

maintained by the World Customs Organization (WCO.) Tariff codes exist for almost

every product involved in global commerce. Required on official shipping documents for

tax assessment purposes, a tariff code ensures uniformity of product classification

worldwide.

A complete tariff code is no less than six digits and are usually no more than twelve

digits. The more digits in a tariff code string, the more specific the product it identifies. A

string of less than six digits is considered a partial tariff code and represents a broad

product category or chapter of products in the HS. The example of Tariff code is EUTARIC scheme used by European Union.

A commodity code is a number used to determine its commodity rate for transport.

Commodity codes are used mostly for statistical purposes. These codes are usually

lower length then Tariff codes and can meet in very first 6 digits ( if HS is used ). The

examples of Commodity code are US Scheduled B and EUSTA in European Union.



© SAP 2009 / Page 15

Knowledge Check

What are the three

sections of codes that

make up the Harmonized

System of tariff nomenclature?



© SAP 2009 / Page 16

Knowledge Check

The first two digits arecalled the chapter, the first

four digits are called the

heading, and the first six

digits are called thesubheading.

The number can be

extended by individualcountries, if required.



© SAP 2009 / Page 17

Business Example

IDES AG, an enterprise headquartered in Frankfurt,

Germany, manufactures outrigger construction cranes andexports them to Switzerland and Israel.

Whereas this company maintains several products, they have

to be classified properly.

How do you choose a classification scheme for this example?

Check the definition of relevant Legal regulation of the country or Customs union

Germany belongs to European Union ( EU )

There is the legal regulation ATLAS Customs Processing System which uses EZT Tariff code scheme based on EU_TARIC scheme

Check the official webpage for the country

German official webpage for Customs processing:

http://www.zoll.de/english_version/index.html

The classification scheme you should apply is always defined by law (so called Legal

regulation) of country or Customs union. This means you have to check the definition of

relevant Legal regulation for Classification scheme which is to be used.

As far as Germany belongs to European Union ( EU ), there is the legal regulation

ATLAS Customs Processing System which uses EZT Tariff code scheme based on

EU_TARIC scheme.

Countries usually have an official webpage which you can use to determine which

Classification scheme to apply. This is the link to German official webpage for Customs

processing: http://www.zoll.de/english_version/index.html



© SAP 2009 / Page 18

Defining a Reference Numbering Scheme

Once you have selected a classification scheme, define it for your transactions:

In SAP BusinessObjects Global Trade Services 8.0, you can define a new numbering schemewith reference to an existing one

The existing numbering scheme you refer to is called a reference numbering scheme

The length of the Reference numbering scheme must be upper or equal as the length of

numbering scheme which is referring to it

Example:

EUSTA – European Commodity code numbering scheme is derived from ( refers to )

DEEZT, German Tariff Code numbering scheme. You can set certain Numbering

Scheme as a reference one by filling Field called Reference scheme.

You can specify the reference numbering scheme in SAP BusinessObjects Global

Trade Services 8.0. This reference scheme is used to simplify the process of assigning

related schemes to your products. This is always the scheme with a code that is of

greater or equal length than the other codes.



© SAP 2009 / Page 19

Transaction: Defining Numbering Schemes

Where to define numbering schemes in SAP BusinessObjects Global Trade Services

8.0: Execute transaction SPRO in SAP GTS system

Follow the path:

Display IMG > SAP Global Trade Services > General Settings > Numbering

Schemes > Define Numbering Scheme for Commodity Codes or Define

Numbering Scheme for Tariff Code Numbers

You can also define the numbering schemes you want to use for your commodity and

tariff codes.



© SAP 2009 / Page 20

Knowledge Check

What are the two

resources you must check

to determine which

classification system to usefor a specific country or

Customs union?



© SAP 2009 / Page 21

Knowledge Check

Check the Legal regulationfor the country or Customs

union, and check the

official web page for thecountry.



© SAP 2009 / Page 22





Topics

This topic describes the Automatic Classification feature in SAP BusinessObjects

Global Trade Services 8.0 and demonstrates how to set it up.



© SAP 2009 / Page 23

Automatic Classification

What does the term Automatic Classification mean?

Automatic Classification is the feature provided by SAP BusinessObjects Global TradeServices 8.0 that allows you to classify certain products in more classification schemes at

once.

This feature is only available for classification schemes which refer to another one, so called

Reference Classification scheme

Automatic Classification uses the reference numbering scheme to extend classification

codes.



© SAP 2009 / Page 24

Automatic Classification: Business Example

IDES AG, an enterprise headquartered in Frankfurt, Germany,

manufactures outrigger construction cranes and exports them toSwitzerland and Israel.

Whereas this company maintains several products, they have to be

classified properly.

One of this product is the Chassis for crane. The number of the product in our GTS

system is GTS-14006.

Follow this path on next slide to reach the transaction for Classification Product Master

Data from the Operative cockpit of SAP GTS 8.0.

In this example, you can automatically change the classification for a group of products.



© SAP 2009 / Page 25


Execute :

1.Enter Transaction /n/sapsll/menu_legal.

2.Select Master Data in the SAP Customs Management section.3.Click New Document for Maintain Products in the Customs Products section.

To automatically classify products:

Enter Transaction /n/sapsll/menu_legal.

Select Master Data in the SAP Customs Management section.

Click Change product for Maintain Products in the Customs Products section.



© SAP 2009 / Page 26


Execute :

4.Enter Logical System Group for the feeder and the Product Number., and then click Execute.

5.Click the Classification tab.

Enter Logical System Group for the feeder and the Product Number, and then click

Execute.

Click the Classification tab.



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Execute:

6. Enter the tariff number and press Enter.

Enter the tariff number and press Enter.



© SAP 2009 / Page 28


If the validity interval does not correspond with the

validity defined for the scheme, a warning message

pops up. Accept or reject the proposed changes asrequired.

This dialog box may appear, depending on the scheme selected.



© SAP 2009 / Page 29


The Selection of Derived Tariff Numbers dialog box displays, which

enables you to select from a list of Classification schemes that

reference the original scheme. For example, EZZT is the referencescheme for DEALN.

This dialog box provides a list of related schemes.



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Execute:

7.Click Adopt Values.

Click Adopt Values.



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The classification number of the reference numbering schemeis adopted by the referencing scheme with shorter

classification number. For example, 84262000000 (scheme

DEEZT) >>> 842620000 (scheme DEALN).

Note the changes.



© SAP 2009 / Page 32

Knowledge Check

What is AutomaticClassification?



© SAP 2009 / Page 33

Knowledge Check

Automatic classification isthe process of extending a

numbering scheme by

referencing another relatednumbering scheme.



© SAP 2009 / Page 34





Topics



© SAP 2009 / Page 35

Mass Classification

What does the term Mass Classification mean?

Mass Classification is the feature provided by SAP BusinessObjects Global Trade Services8.0 that allows you to classify classify more than one products under certain Legal regulation

at the same time

This feature is available for any product in the worklist

Mass Classification enables to you selectively apply a scheme to multiple products.

For example, if your enterprise imports or exports chocolate bars and you need to

classify a new brand of chocolate, you can classify 20 different types of chocolate at

once. This saves your time, since they all have the same commodity code or tariff code

number.



© SAP 2009 / Page 36

Classification of Products via Worklist

Execute :

1. Enter Transaction /n/sapsll/menu_legal.

2. Select Classification in the SAP Customs Management section.3. Select Classify Products via Worklist for Tariff codes or Classsify Products via Worklist for

Commodity codes.

To classify products via a worklist:

Enter Transaction /n/sapsll/menu_legal.

Select Classification in the SAP Customs Management section.

Select Classification of Products via Worklist for Tariff codes or Classification of

Products via Worklist for Commodity codes.



© SAP 2009 / Page 37


Execute :

4. Select the appropriate values for the Import/Export and Legal Regulation fields.

5. Select the Transfer Duty Tariff Numbers check box to activate Automatic Classification.6. Specify the range of products you want to select, and then click the Execute icon.

Select the appropriate values for Import/Export and Legal Regulation.

Select the Transfer Duty Tariff Numbers check box to activate Automatic Classification.

Specify the range of products you want to select, and then click Execute.



© SAP 2009 / Page 38


Execute :

7. Select the set of Products you want to classify.

8. Click the Classify Multiple Products icon.

Select the set of Products you want to classify. You can use the Ctrl key to select more

non-adjacent products.

Click Classify Multiple Products.



© SAP 2009 / Page 39


Execute :

9. Enter the Tariff Number you want to use.

10. Click the Start Mass Classification icon.

Enter the Tariff Number you want to use.

Click Start Mass Classification.



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Execute:

11. Click the Adopt Values icon.

The Selection of Derived Tariff Numbers dialog box display the referencing schemes.

Click Adopt Values.



© SAP 2009 / Page 41

Knowledge Check

How can you apply the

same classification tomultiple products?



© SAP 2009 / Page 42

Knowledge Check

You can select productsfrom the Worklist (use the

Ctrl key to select non-

adjacent items), and apply

the selected value to all of them at the same time.



© SAP 2009 / Page 43

Benefits

What are the benefits of using the Automatic and Mass Classification features?

Reducing time spent classifying similar products Avoiding mistakes that might occur by manual classification

Take advantage of the relationships between schemes

Use one or both features based on the requirements of specific types of products

The Automatic and Mass Classification features reduce the amount of time required to

accurately classify your products.



© SAP 2009 / Page 44

Reminders

Keep in mind:

If you want to use Automatic Classification to classify one or more products, you have toensure that there are relevant schemes defined as Reference numbering schemes in the

system

Reference numbering scheme has to always have structure length longer or equal to scheme

to which it refers

When using Mass Classification, do not forget to select the Duty Tariff Numbers check box toactivate Automatic Classification option if necessary

Keep in mind that there are specific pre-requisites for using the Automatic and Mass

Classification features.



© SAP 2009 / Page 45

Product Master Classification

Lesson Summary

You should now be able to:

Describe the purpose and advantages of product classification

Describe classification schemes and how they relate to each other

Define the Harmonized System of tariff nomenclature

Identify the determining factors in selecting a classification scheme

Describe how to use reference numbering schemes

Define Automatic Classification and Mass Classification

Classify products using Automatic Classification and using a worklist

The demo will now show Automatic Classification of Product Master Data

The product number is GTS-14006, which is Cassis for crane. Assign the

Commodity code DEEZT 84262000000 relevant for ATLAS Legal Regulation to

this product. Because the DEEZT Classification scheme is the Reference

numbering scheme for EUSTA, the system classifies the product for the

EUSTA scheme automatically.



© SAP 2009 / Page 46

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